Examining The Interaction Effect of Cost Information Types and Strategy on the Effectiveness of New Product Development: An Experimental Study

By Dyah Ekaari Sekar Jatiningsih and Mahfud Sholihin

Previous studies on the role of cost information in New Product Development (NPD) producing conflicting results. Motivated by those conflicting results whether cost information is beneficial or detrimental in the design process of new product, an experiment approach is adopted to examine the interactive effect of cost information types and strategy on the effectiveness of new product development.

The results of this study show that cost effectiveness of new product design is enhanced when designers are facilitated with specific cost information rather than relative cost information, with greater magnitude in low cost strategy orientation. Additionally, we find a trade off in low cost strategy orientation, namely as designers are provided with more precise cost information, their focus on product feature decreases.

JAMARv13.2-Cost Information and Strategy


About Prof Janek Ratnatunga 1129 Articles
Professor Janek Ratnatunga is CEO of the Institute of Certified Management Accountants. He has held appointments at the University of Melbourne, Monash University and the Australian National University in Australia; and the Universities of Washington, Richmond and Rhode Island in the USA. Prior to his academic career he worked with KPMG.
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